HQ 0089227 - "SOFTLINK" Data Communications System; Telegraphic Apparatus; Protocol Conversion; Modem - United States International Trade Commision Rulings

United States International Trade Commision Rulings And Harmonized Tariff Schedule

faqs.org Rulings By Number Rulings By Category Tariff Numbers

faqs.org > Rulings and Tariffs Home > Rulings By Number > 1991 HQ Rulings > HQ 0089202 - HQ 0089336 > HQ 0089227

HQ 089227

July, 24, 1991

CLA-2 CO:R:C:M 089227 MBR

CATEGORY: CLASSIFICATION

TARIFF NO.: 8517

Mr. Julian Higgins
5407 Eglinton Ave. West, #202
Toronto, Ontario
M9C 5K6 Canada

RE: "SOFTLINK" Data Communications System; Telegraphic Apparatus; Protocol Conversion; Modem

Dear Mr. Higgins:

This is in reply to your letter of March 5, 1991, on behalf of Smartlink Canada Limited, requesting classification of the "SOFTLINK" data communications system, under the Harmonized Tariff Schedule of the United States Annotated (HTSUSA).

FACTS:

Your product literature states that the main applications of SOFTLINK involve the transfer of data between asynchronous host systems and Value Added Networks (VANS). These include links into the CentreFile Service, and links from universities and polytechnics into the UCCA and PCAS networks.

The synchronous transmission rate is determined by the external clock derived from a modem or Network Termination Unit (NTU). Each synchronous port can operate at its own speed, or SOFTLINK can provide a clock to one port derived from the other port. The protocol is selected by means of the MODE switch on the front panel. There are 8 combinations of 2780/3780, both full and half duplex on both ports. At the end of the file transfer process, SOFTLINK transfers a log file to the local host giving a history of all file transfers taking place and the number of lines in each file. Any errors in transmission will be highlighted in the log file. The SOFTLINK requires an external modem in order to transmit and receive data over carrier current line systems.

The SOFTLINK unit has a metal housing and "is about the size of a large telephone directory." It contains a power supply and
a single circuit board. The circuit board contains a processor, memory, devices to control the bringing in and sending out of data, and two EPROMs (Erasable Programmable Read Only Memory). The EPROMs are programmed by Smartlink to fulfill a customer's particular needs.

ISSUE:

What is the classification of the SOFTLINK data communications system, under the Harmonized Tariff Schedule of the United States Annotated (HTSUSA)?

LAW AND ANALYSIS:

The General Rules of Interpretation (GRI's) to the HTSUSA govern the classification of goods in the tariff schedule. GRI 1 states, in pertinent part:

...classification shall be determined according to the terms of the headings and any relative section or chapter notes...

Heading 8517, HTSUSA, provides for: "[e]lectrical apparatus for line telephony or line telegraphy, including such apparatus for carrier-current line systems." The Harmonized Commodity Description and Coding System Explanatory Notes (EN) to heading 8517 of the HTSUSA, page 1360, state:

The term "electrical apparatus for line telephony or line telegraphy" means apparatus for the transmission between two points of speech or other sounds (or of symbols representing written messages, images or other data), by variation of an electric current or of an optical wave flowing in a metallic or dielectric (copper, optical fibers, combination cable, etc.) circuit connecting the transmitting station to the receiving station. The heading covers all such electrical apparatus designed for this purpose, including the special apparatus used for carrier- current line systems.

The term "apparatus" has been defined by the courts as a combination of articles and materials which are intended, adapted, and necessary for the accomplishment of some purpose. The Deseret Co., v. United States, ___CIT___, Slip Op. 86-93 (1986). Your product literature states that the main applications of SOFTLINK involve the transfer of data between asynchronous host systems and Value Added Networks (VANS). Therefore, clearly the SOFTLINK data communications system is a combination of articles and materials intended, adapted and necessary for the accomplishment of a specific purpose, i.e., that of data communication.

The issue has been raised as to what the term "Carrier Current" line systems encompasses. "Carrier Current" is used in connection with both power and communications circuits, however, the principle is basically the same for both systems. The term refers to the use of a relatively high-frequency alternating current superimposed on the ordinary circuit frequencies in order to increase the usefulness of a given transmission line. Thus, in the case of power systems, carrier currents of several kHz frequency are coupled to the 60-Hz transmission lines. These carrier currents may be modulated to provide telephone communication between points on the power system or they may be used to actuate relays on the system. The latter use is known as carrier relaying. Carrier currents have greatly extended the usefulness of existing line facilities of the telephone and telegraph companies. Several carrier frequencies may be coupled to the lines already having regular voice or telegraph signals on them. Each of these carrier frequencies may be modulated with a separate voice or telegraph channel and thus a given line may carry the regular signal plus several new carrier channels, each of which is equivalent to another circuit at regular frequencies. At the receiving end, the various channels are separated by filters and the signals are demodulated and then fed to conventional phone or telegraph circuits. The number of carrier channels which may be applied to a given line depends upon the characteristics of the line, varying from one or two for some lines to several hundred for a coaxial cable. See Van Nostrand's Scientific Encyclopedia, Seventh Edition, Vol. 1, page 518 (1989).

However, heading 8517, HTSUSA, provides for: "[e]lectrical apparatus for line telephony or line telegraphy, including such apparatus for carrier-current line systems." Therefore, heading 8517, HTSUSA, includes apparatus for carrier-current line systems, but is not limited to such apparatus.

The Customs Co-Operation Council Harmonized Commodity Description and Coding System, Summary of Comments and Observations by the Technical Team, Chapter 85, (April 25, 1979) stated:

With regard to packet switching equipment, the Technical Team reproduces below, for information, a text published by the Secretariat for the attention of the Working Party on Customs applications of computers (Doc. 21.926):

The transmission of computer system messages or parts of messages between distant points in the form of discrete packets which are transmitted over an independently operated computer driven network. The routes followed by messages are determined by the network and not by the sending systems. Packet switching is in many ways analogous to the conventional
manual postal system in which an independent carrier receives and delivers letter packets for a community of users. Any one transmission line of the network may carry messages from different senders to different addresses. A message to be transmitted across a packet switched network is handled in the following manner: [t]he message is split into a number of packets of fixed maximum size each prefixed by the source and destination addresses, length and sequence number. Each packet is then handled by the network as a discrete message, being passed from one switch or node of the network to the next as soon as possible, depending on the destination address, the traffic density and the routes available. At the destination, the addresses, etc., are stripped off, the packets combined to form the original message and an acknowledgement sent back to the source according to whether or not the message is free from error. By using high speed links for the network, packets, originating from a large number of users transmitting into the network at moderate speeds, may be interleaved within the network, while maintaining full integrity and security. In this manner, network time is shared between users in a similar manner to that of a time sharing computer system.

Although the above text is not binding on us, such information is helpful in that it is demonstrative of the Customs Co-Operation Council's consideration for inclusion of this type of apparatus in Chapter 85.

Certainly, the SOFTLINK data communication system is apparatus designed for the transmission of data between two points, by variation of an electric current connecting the transmitting station to the receiving station. However, you argue that the SOFTLINK is not a modem or a dataset. We agree, but the SOFTLINK data communications system need not be a modem or a dataset to be properly classifiable in heading 8517, HTSUSA. Therefore, it is Customs position that the SOFTLINK data communication system is properly classifiable under subheading 8517.82.00, which provides for: "[e]lectrical apparatus for line telephony or telegraphy, including such apparatus for carrier- current line systems: [o]ther apparatus: [t]elegraphic." For similar holdings regarding similar data communications merchandise, see HQ 086035, dated August 2, 1990, HQ 086478, dated April 9, 1990, HQ 087468, dated January 8, 1991, HQ 086615, dated April 20, 1990, HQ 085661, dated February 15, 1990, and NY 852403, dated May 31, 1990.

HOLDING:

The SOFTLINK data communication system is properly classifiable under subheading 8517.82.00, which provides for: "[e]lectrical apparatus for line telephony or telegraphy, including such apparatus for carrier-current line systems: [o]ther apparatus: [t]elegraphic." The rate of duty is 4.7% ad valorem. The rate of duty is Free if the applicable regulations of the United States-Canada Free Trade Agreement are met.

Sincerely,

John Durant, Director

Previous Ruling Next Ruling